Our Business, Our Purpose
Three year summary as of and for the year ended
|Millions (Except Per Common Share Data)||2017||2016||2015||17/16||16/15|
|* Indicates calculation not meaningful or result is equal to or greater than 100%.|
|Cost of Sales||11,240||12,329||9,648||(9)||28|
|Selling, informational and administrative expenses||14,784||14,837||14,809||-||-|
|Research and development expenses||7,657||7,872||7,690||(3)||2|
|Restructuring charges and certain acquisition-related costs||487||1,724||1,152||(72)||50|
|Income from continuing operations||21,353||7,229||6,975||*||4|
|Discontinued operations – net of tax||2||17||11||(87)||49|
|Net income attributable to Pfizer Inc.(b)||21,308||7,215||6,960||*||4|
|Diluted earnings per common share attributable to Pfizer Inc. common shareholders(b)||3.52||1.17||1.11||*||5|
|Weighted-average shares – diluted||6,058||6,159||6,257||(2)||(2)|
|Number of common shares outstanding||5,979||6,070||6,175||(1)||(2)|
|Total long-term obligations(c)||69,714||80,660||72,985||(14)||11|
|Total Pfizer Inc. shareholders’ equity||71,308||59,544||64,720||20||(8)|
|Shareholders’ equity per common share||11.93||9.81||10.48||22||(6)|
|Net cash provided by operating activities||16,470||15,901||14,688||4||8|
|Property, plant and equipment additions||1,956||1,823||1,397||7||30|
|Purchases of common stock||5,000||5,000||6,160||-||(19)|
|Cash dividends paid||7,659||7,317||6,940||5||5|
Detailed information on our financial and operational performance can be found in the 2017 Financial Report, which is filed as Exhibit 13 to our 2017 Annual Report on Form 10-K.
Financial Performance Footnotes
(a) 2017 reflects the February 3, 2017 sale of Hospira Infusion Systems net assets to ICU Medical, Inc. and the acquisition of the development and commercialization rights to AstraZeneca’s small molecule anti-infectives business, primarily outside the U.S. on December 22, 2016. 2017 and 2016 reflect the acquisition of Medivation, Inc. on September 28, 2016 and the acquisition of Anacor Pharmaceuticals, Inc. on June 24, 2016. 2017, 2016 and 2015 reflect the acquisition of Hospira, Inc. on September 3, 2015. For additional information, see Notes to Consolidated Financial Statements––Note 2. Acquisitions, Sale of Hospira Infusion Systems Net Assets, Research and Development and Collaborative Arrangements, Equity-Method Investments and Cost-Method Investment in our 2017 Financial Report, which is filed as Exhibit 13 to our 2017 Annual Report on Form 10-K.
(b) 2017 reflects the impact of the Tax Cuts and Jobs Act or TCJA.
(c) Defined as Long-term debt, Pension benefit obligations, net, Postretirement benefit obligations, net, Noncurrent deferred tax liabilities, Other taxes payable and Other noncurrent liabilities. Our short-term borrowings are rated P-1 by Moody’s Investors Service (Moody’s) and A-1+ by Standard & Poor’s (S&P). Our long-term debt is rated A1 by Moody’s (Outlook: Stable) and AA by S&P (Outlook: Stable). Moody’s and S&P are major corporate debt-rating organizations. A security rating is not a recommendation to buy, sell or hold securities and the rating is subject to revision or withdrawal at any time by the rating organization. Each rating should be evaluated independently of any other rating.
Key Performance Indicators
Access to Medicines
Global programs and commercial transactions to increase access to medicines in emerging markets 1
Top 21 global burdens of disease addressed by products and pipeline2
- We currently have 356 active programs3 for launched medicines in markets that have a gross domestic product (GDP) per capita less than Portugal.
- This covers 63 countries.
- Of these, 12 programs cover multiple therapies while the rest are product specific.
- In total, these cover 125 different products in our portfolio.
Access to Medicines Footnotes
1. Program/commercial transaction defined as a Pfizer investment or dedicated contract of over $250,000 with a national government or procurement agency, multilateral organization, non-governmental organization, private institution or aid agency. Represents multi-country initiatives only and does not include numerous local initiatives to address access.
2. As defined by the World Health Organization. Burdens of illness not addressed include road traffic accidents, prematurity and low birth weight, and self-inflicted injuries.
3. The number of patient access programs with pricing tailored to different patient segments (for at least one product), allowing access for more patients.
Top Ten Medicines and Vaccines by Revenues in 2017
Prevnar 13 / Prevenar 13 (Pneumococcal 13-valent Conjugate Vaccine [Diphtheria CRM197 Protein])
Viagra® (sildenafil citrate)
Sutent® (sunitinib malate)
Top Ten Medicines and Vaccines by Revenues in 2017 Footnotes
1. Total Revenue (PIH+PEH)
2. Alliance Revenue & Direct Sales
3. Outside U.S. and Canada
For more information on any of these medicines and vaccines, visit: Pfizer Pharmaceutical Products.
Injuries Per 100 Colleagues1
Total injury rate in 2017 was 44% higher than in 2016
Progress on Our 2020 Environmental Sustainability Goals2
Greenhouse Gas Emissions
Total scope 1 and 2 GHG emissions
In million metric tons CO2EQ
GHG emissions in 2017 were 3.7% lower than in 2016
Total hazardous and non-hazardous waste in thousand metric tons
Total waste disposed in 2017 was 7% lower than in 2016
Excluding non-contact cooling water in million cubic meters
Total water withdrawal (excluding non-contact cooling water) in 2017 was 7% lower than in 2016
Supply Chain Environmental Sustainability Goal3
|Key suppliers supporting Pfizer’s supplier code of conduct||83%||79%||100%|
|Key suppliers aligning with Pharmaceutical Supply Chain initiative (PSCI) principles||66%||35%||100%|
|Key suppliers managing their environmental impacts||84%||76%||100%|
|Key suppliers with reduction goals for GHG, waste disposal and water withdrawal||53%||51%||90%|
KPI Access to Medicines Footnotes
1. Our 2016 injury data included the Medical Devices business added through the Hospira acquisition and subsequently divested and not reflected in 2017 injury data. Our 2017 injury data includes a onetime food borne illness event impacting colleagues at an external meeting location. Excluding this event, we had an approximately 15% increase in the injury rate in 2017 as a result of injuries and illnesses related to incidents such as slips, trips and falls, and ergonomics, among others.
2. Applies to facilities within Pfizer's operational control as compared with a 2012 baseline. Data are baseline adjusted, reported absolute, using reporting boundaries per the WRI GHG Protocol. The 2012–2016 GHG data was independently verified to the limited assurance level. The verification of the 2017 GHG data will be accomplished in 2018. A number of one time events contributed to our overall emission reductions experienced in 2017. Between 2018 and thru 2020 (goal year) we expect fluctuations in our environmental sustainability performance due to business changes, however, we are confident that we are on track to meet our 2020 Goals through ongoing focus on emission and resource reduction projects. Expanded environmental reporting will be posted on www.pfizer.com later this year.
3. Key suppliers include 128 major contributors to our external environmental footprint, strategic collaborators with Worldwide Research and Development, and those suppliers we anticipate having continued involvement with. Key suppliers represent only a portion of Pfizer’s overall supply chains for goods and services.
Performance and Financial Guidance1
Revenues (in billions)
Adjusted cost of sales4 as a % of revenues
Adjusted SI&A expenses4 (in billions)
Adjusted R&D expenses4 (in billions)
Adjusted other (income)/deductions4 (in millions)
Effective tax rate on adjusted income4
Performance and Financial Guidance Footnotes
1. Please refer to Pfizer’s 2017 Annual Report on Form 10-K, including the sections captioned Risk Factors and Forward-Looking Information and Factors That May Affect Future Results, for a description of the substantial risks and uncertainties related to the forward-looking statements, including our 2018 Financial Guidance, included in this Annual Review. Pfizer does not provide guidance for GAAP Reported financial measures (other than Revenues) or a reconciliation of forward-looking non-GAAP financial measures to the most directly comparable GAAP Reported financial measures on a forward-looking basis because it is unable to predict with reasonable certainty the ultimate outcome of pending litigation, unusual gains and losses, acquisition-related expenses and potential future asset impairments without unreasonable effort. These items are uncertain, depend on various factors, and could have a material impact on GAAP Reported results for the guidance period.
2. Our 2017 financial guidance reflected:
- Did not assume the completion of any business development transactions not completed as of October 1, 2017, including any one-time upfront payments associated with such transactions.
- Exchange rates that assumed a blend of the actual exchange rates in effect through September 2017 and the mid-October 2017 exchange rates for the remainder of the year.
- For Revenues, reflected the previously estimated negative impact of $2.3 billion due to recent and expected generic and biosimilar competition for certain products that have recently lost patent protection.
- Reflected the previously estimated negative impact of $0.1 billion on Revenues and $0.01 on Adjusted diluted Earnings Per Share (EPS) as a result of unfavorable changes in foreign exchange rates relative to the U.S. dollar compared to foreign exchange rates from 2016.
- For Adjusted diluted EPS, assumed diluted weighted-average shares outstanding of between 6.0 and 6.1 billion shares.
3. The 2018 financial guidance (1) is as of January 30, 2018; (2) is not being updated or reaffirmed in connection with this Annual Review; and (3) reflects:
- A full year contribution from Consumer Healthcare. Pfizer continues to expect that any decision regarding strategic alternatives for Consumer Healthcare would be made during 2018.
- Does not assume the completion of any business development transactions not completed as of December 31, 2017, including any one-time upfront payments associated with such transactions.
- Exchange rates assumed are as of mid-January 2018.
- For Revenues, reflects an anticipated negative impact of $2.0 billion due to recent and expected generic and biosimilar competition for certain products that have recently lost or are anticipated to soon lose patent protection. Assumes no generic competition for Lyrica in the U.S. until June 2019, which is contingent upon a six-month patent-term extension granted by the FDA for pediatric exclusivity, which the company is currently pursuing.
- The anticipated favorable impact of $900 million on Revenues and $0.06 on Adjusted diluted EPS as a result of favorable changes in foreign exchange rates relative to the U.S. dollar compared to foreign exchange rates from 2017.
- Guidance for the effective tax rate on Adjusted income reflects our provisional estimate of the impact of the Tax Cuts and Jobs Act or TCJA.
- For Adjusted diluted EPS, assumes diluted weighted-average shares outstanding of ~6.0 billion shares, which reflects anticipated share repurchases totaling $5.0 billion in 2018. Dilution related to share-based employee compensation programs is expected to offset by approximately half the reduction in shares associated with these anticipated share repurchases.
4. Adjusted income and its components and Adjusted diluted EPS are defined as reported U.S. generally accepted accounting principles (U.S. GAAP) net income(5) and its components and reported diluted EPS(5) excluding purchase accounting adjustments, acquisition-related costs, discontinued operations and certain significant items (some of which may recur, such as restructuring or legal charges, but which management does not believe are reflective of ongoing core operations), including significant changes resulting from tax legislation such as the Tax Cuts and Jobs Act (TCJA). Adjusted cost of sales, Adjusted selling, informational and administrative (SI&A), Adjusted Research and Development (R&D) expenses and Adjusted other (income)/deductions are income statement line items prepared on the same basis as, and therefore components of, the overall Adjusted income measure. As described in the Management’s Discussion and Analysis of Financial Condition and Results of Operations––Non-GAAP Financial Measure (Adjusted Income) section of our Annual Report on Form 10-K for the year ended December 31, 2017, management uses Adjusted income, among other factors, to set performance goals and to measure the performance of the overall company. Because Adjusted income is an important internal measurement for Pfizer, management believes that investors’ understanding of our performance is enhanced by disclosing this performance measure. Pfizer reports Adjusted income, certain components of Adjusted income, and Adjusted diluted EPS in order to portray the results of major operations––the discovery, development, manufacture, marketing and sale of prescription medicines, vaccines and consumer healthcare (OTC) products––prior to considering certain income statement elements. Reconciliations of certain U.S. GAAP Reported to Non-GAAP Adjusted information for 2017 are provided in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of our Annual Report on Form 10-K for the year ended December 31, 2017. The Adjusted income and its components and Adjusted diluted EPS measures are not, and should not be viewed as, substitutes for U.S. GAAP net income and its components and diluted EPS. Adjusted income and its components and Adjusted diluted EPS are Non-GAAP financial measures that have no standardized meaning prescribed by U.S. GAAP and, therefore, are limited in their usefulness to investors. Because of their non-standardized definitions, Adjusted income and its components (unlike U.S. GAAP net income and its components) and Adjusted diluted EPS (unlike U.S. GAAP diluted EPS) may not be comparable to the calculation of similar measures of other companies. Adjusted income and its components and Adjusted diluted EPS are presented solely to permit investors to more fully understand how management assesses performance.
5. Reported Net Income in accordance with U.S. GAAP is defined as net income attributable to Pfizer Inc. in accordance with U.S. GAAP and Reported Diluted EPS is defined as reported diluted EPS attributable to Pfizer Inc. common shareholders in accordance with U.S. GAAP.